BoU marginally reduces key lending rate to 11.5%

Bank of Uganda today (Dec. 3) announced a marginal fall in the central bank rate (CBR) by 50 basis points from 12% in November, 2013 to 11.5% in December.

While announcing the new rate before the media, Central Bank Deputy Governor, Louis Kasekende said the reduction was based on recent inflation numbers released by Uganda Bureau of Statistics at the end of November.

Because of the need to further support private sector investment, it was necessary to implement an accommodative monetary policy stance, Kasekende said.

Annual headline inflation declined to 6.8% in November from 8.1% in October while core inflation, which the monetary policy targets declined to 7.0% from 7.2% in November and October respectively.

The Bank forecasts suggest that inflation will edge down further in the coming 2-3 months driven by crop harvests to about 5.5-6.5% but rise to about 6-7% during the second half of 2014.

Kasekende said they expect commercial banks to react to the reduction in the CBR after meeting them tomorrow, Dec. 4.